FINANCE

Green sells stake in Topshop to Leonard Green for $805 million

BY Marianne Wilson

New York — British billionaire Sir Philip Green, the owner of the Arcadia retail group, sold a 25% stake in his fast-fashion Topshop and Topman retail chains to Los Angeles-based Leonard Green & Partners for about $805 million. Arcadia’s other retail divisions include Miss Selfridges, Bhs, and Dorothy Parker.

The deal, which will help fund Topshop’s expansion in the United States, values the company at $3.2 billion, according to a statement from Green. Topshop currently has three U.S. flagships, in New York City, Los Angeles and Chicago. It also has entered into a deal to open in-store shops in select Nordstrom locations.

“Both the Topshop/Topman businesses are very cash generative, and with LGP alongside us, our plan is to step up our international investment program as relevant locations present themselves in the USA and around the world,” Green said in a statement. “This is a very exciting time for the Arcadia Group, with a clear strategy now in place for Topshop/Topman to become major global players. All of our other businesses will continue to be invested in and developed.”

The transaction leaves both Topshop and Arcadia free of bank debt and with positive cash balances, the retailer said. Arcadia owner Taveta Investments Ltd. reported net debt of 308.9 million pounds at the end of its last financial year.

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The problem that won’t go away

BY CSA STAFF

Walmart is occupying the familiar role of corporate villain again this week as new details emerge regarding a fire that killed 112 people at a Bangladesh apparel factory used by one of the retailer’s suppliers.

It doesn’t matter that supplier was not supposed to be using the factory in question or that other retailers were also found to have had goods manufactured at the facility. What matters is that once again Walmart is in the headlines against the backdrop of familiar themes relating to the complexity and operational challenges inherent in its size and the impact its low cost/low price business model has on suppliers who are forced to cut corners to meet Walmart’s requirements. At least that is how the situation tends to be portrayed.

For more on the situation in Bangladesh and Walmart’s involvement click here to read a Reuters account about how "apparel factory fire reveals big brands’ shadowy supply chains," or here for Bloomberg’s perspective on how, "Walmart shouldn’t discount worker safety."

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$21.4 billion and counting: online sales surge continues

BY CSA STAFF

Online holiday sales continue to set new sales records, according to digital measurement firm comScore, and Walmart is presumably sharing in that growth given its site typically ranks second only to Amazon in terms of traffic.

Online sales during the first 32 days of the holiday season increased 14% to $21.4 billion with growth fueled by a combination of more online shoppers and increased spending per shopper, comScore announced this week. Three individual days have eclipsed $1 billion in spending, led by Cyber Monday, which became the heaviest online spending day on record at $1.46 billion, a 17% increase from the prior year. Even though growth rates softened considerably in the wake of Cyber Monday and through the past weekend, percentage gains for the November 26-30 period known as Cyber Week still were in the double digits, up 11% from the prior year to $5.5 billion.

"While Cyber Monday was a high point for holiday e-commerce spending and Cyber Week saw several strong spending days, there was a clear softening in the growth rate during the back half of the week," said comScore chairman Gian Fulgoni. "It is likely that, to some extent, holiday spending was pulled forward to the Thanksgiving-Black Friday period given the heightened promotional activity around that time. And some of the softening is a natural post-Cyber Monday lull that we often experience, an effect that may be somewhat more pronounced this year given the additional shopping days between Thanksgiving and Christmas. However, as the urgency to finish one’s holiday shopping increases we expect to see growth rates pick up again in the next couple of weeks before Christmas."

An analysis by the firm of holiday spending demonstrates how various components are contributing to the current 14% growth rate. So far, spending growth is being driven both by an increase in the number of buyers, up 9% to 128.7 million, and average spending per buyer, up 5% to $165.90. The increase in spending per buyer is coming primarily from an increase in the number of transactions, up 4% to 2.19 per buyer, as opposed to the amount spent per transaction, up only 1% to $75.90.

"That we are seeing growth come from an increase in both the number of buyers and the average spending per buyers suggests broad-based strength in the e-commerce sector," Fulgoni said. "It reflects not only the health of the e-commerce channel as more people buy online, but also the health of the consumer who has been willing to spend more online this year than last. It’s particularly noteworthy that half of the online population has made an e-commerce purchase thus far in the holiday season"

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